History of the cooperative movement

The history of the cooperative movement concerns the origins and history of cooperatives. Although cooperative arrangements, such as mutual insurance, and principles of cooperation existed long before, the cooperative movement began with the application of cooperative principles to business organization.

The cooperative movement began in Europe in the 19th century, primarily in Britain and France, although The Shore Porters Society claims to be one of the world's first cooperatives, being established in Aberdeen in 1498 (although it has since demutualized to become a private partnership).[1] The industrial revolution and the increasing mechanism of the economy transformed society and threatened the livelihoods of many workers. The concurrent labour and social movements and the issues they attempted to address describe the climate at the time.

In the decades that followed, several cooperatives or cooperative societies formed including Lennoxtown Friendly Victualling Society, founded in 1812.[3]

By 1830, there were several hundred co-operatives.[4] Some were initially successful, but most cooperatives founded in the early 19th century had failed by 1840.[5] However, Lockhurst Lane Industrial Co-operative Society (founded in 1832 and now Heart of England Co-operative Society), and Galashiels and Hawick Co-operative Societies (1839 or earlier, merged with The Co-operative Group) still trade today.[6][7]

Robert Owen (1771–1858) is considered as the father of the cooperative movement. A Welshman who made his fortune in the cotton trade, Owen believed in putting his workers in a good environment with access to education for themselves and their children. These ideas were put into effect successfully in the cotton mills of New Lanark, Scotland. It was here that the first co-operative store was opened. Spurred on by the success of this, he had the idea of forming "villages of co-operation" where workers would drag themselves out of poverty by growing their own food, making their own clothes and ultimately becoming self-governing. He tried to form such communities in Orbiston in Scotland and in New Harmony, Indiana in the United States of America, but both communities failed.

Although Owen inspired the co-operative movement, others – such as Dr William King (1786–1865) – took his ideas and made them more workable and practical. King believed in starting small, and realized that the working classes would need to set up co-operatives for themselves, so he saw his role as one of instruction. He founded a monthly periodical called The Co-operator,[9] the first edition of which appeared on 1 May 1828. This gave a mixture of co-operative philosophy and practical advice about running a shop using cooperative principles. King advised people not to cut themselves off from society, but rather to form a society within a society, and to start with a shop because, "We must go to a shop every day to buy food and necessaries - why then should we not go to our own shop?" He proposed sensible rules, such as having a weekly account audit, having 3 trustees, and not having meetings in pubs (to avoid the temptation of drinking profits).

The Rochdale Society of Equitable Pioneers was a group of 10 weavers and 20 others in Rochdale, England, that was formed in 1844.[2] As the mechanization of the Industrial Revolution was forcing more and more skilled workers into poverty, these tradesmen decided to band together to open their own store selling food items they could not otherwise afford. With lessons from prior failed attempts at co-operation in mind, they designed the now famous Rochdale Principles, and over a period of four months they struggled to pool one pound sterling per person for a total of 28 pounds of capital. On December 21, 1844, they opened their store with a very meagre selection of butter, sugar, flour, oatmeal and a few candles. Within three months, they expanded their selection to include tea and tobacco, and they were soon known for providing high quality, unadulterated goods.

The Co-operative Group formed gradually over 140 years from the merger of many independent retail societies, and their wholesale societies and federations. In 1863, twenty years after the Rochdale Pioneers opened their co-operative, the North of England Co-operative Society was launched by 300 individual co-ops across Yorkshire and Lancashire. By 1872, it had become known as the Co-operative Wholesale Society (CWS). Through the 20th century, smaller societies merged with CWS, such as the Scottish Co-operative Wholesale Society (1973) and the South Suburban Co-operative Society (1984).

By the 1990s, CWS's share of the market had declined considerably and many came to doubt the viability of co-operative model. CWS sold its factories to Andrew Regan in 1994. Regan returned in 1997 with a £1.2 billion bid for CWS. There were allegations of "carpet-bagging" - new members who joined simply to make money from the sale - and more seriously fraud and commercial leaks. After a lengthy battle, Regan's bid was seen off and two senior CWS executives were dismissed and imprisoned for fraud. Regan was cleared of charges. The episode recharged CWS and its membership base. Tony Blair's Co-operative Commission, chaired by John Monks, made major recommendations for the co-operative movement, including the organisation and marketing of the retail societies. It was in this climate that, in 2000, CWS merged with the UK's second largest society, Co-operative Retail Services.

Its headquarters complex is situated on the north side of Manchester city centre adjacent to the Manchester Victoria railway station. The complex is made up of many different buildings with two notable tower blocks of New Century House and the solar panel-clad CIS tower.

Other independent societies are part owners of the Group. Representatives of the societies that part own the Group are elected to the Group's national board. The Group manages The Co-operative brand and the Co-operative Retail Trading Group (CRTG), which sources and promotes goods for food stores.[10] There is a similar purchasing group (CTTG) for co-operative travel agents.

Alice Acland, the editor of the "Women's Corner" in the "Co-operative News" publication, and Mary Lawrenson, a teacher, recognized the need for a separate women's organization within the Cooperative Movement and began organizing a "Woman's League for the Spread of Co-operation" in 1883. This League formally met for the first time during the 1883 Co-operative Congress in Edinburgh in a group of 50 women and established Acland as its organizing secretary. By 1884 it had six different branches with 195 members, and the League was renamed the Women's Cooperative Guild.[11]

The Guild organized around working women's issues and expanding the Cooperative Movement. It continued to publish articles advocating for women's involvement in the Cooperative Movement in the "Women's Corner," and later through its own publications such as "The importance of women for the cooperative movement." The Guild also opened the Sunderland cooperative store in 1902, which catered to poor working class women. It engaged in many political campaigns concerning women's health, women's suffrage and pacifism.[12] The organization still exists today as the Co-operative Women's Guild and participates in social justice activism.[13]

An independently formulated co-operative model was developed in Germany, the credit union, by Raiffeisen and Schultz-Delitsch. The model was carried abroad reaching the United States by 1910.[14] By the 1930s, a national association was formed in the U.S. This organization began to develop international programs, and by the 1970s, a World Council was formed.[15]

Co-operatives in the U.S. have a long history, including an early factory in the 1790s. By the 1880s, the Knights of Labor and the Grange both promoted member-owned organizations.[16] Energy co-operatives were founded in the U.S. during the Depression and the New Deal.[17] Diverse kinds of co-operatives were founded and have continued to perform successfully in different areas, in agriculture, wholesale purchasing, telephones, and in consumer food buying.[18][19][20]

James Warbasse was an American doctor who became the first president of the U.S. National Co-operative Business Association. He wrote extensively on co-operative history and philosophy.[21] Benjamin Ward began an important effort in co-operative economic theory in the 1950s, with Jaroslav Vanek developing a general theory.[22]David Ellerman began a line of theoretical thinking beginning with legal principles, developing especially the labor theory of property, and later reaching a treatment which adjusts conventional economic theory to include co-operative premises. At one point in the 1990s, he worked at the World Bank with Noble laureate Joseph Stiglitz.[23]

Co-operative enterprises were formed successfully following Rochdale, and an international association was formed in 1895.[24] Co-operative enterprises are now widespread,[25] with one of the largest and most successful examples being the industrial Mondragón Cooperative Corporation in the Basque country of Spain. Mondragon Co-op was founded under the oppressive conditions of Fascist Franco Spain after community-based democracy-building activities of a priest, Jose Maria Arizmendiarrieta. They have become an extremely diverse network of co-operative enterprises, a huge enterprise in Spain, and a multinational concern.[26][27][28][29] Co-operatives were also successful in Yugoslavia under Tito where Workers' Councils gained a significant role in management.[30]

In many European countries, cooperative institutions have a predominant market share in the retail banking[31] and insurance businesses. There are also concrete proposals for the cooperative management of the common goods, such as the one by Initiative 136 in Greece.

An annual general meeting of a retail co-operative in England, 2005.

In the UK, co-operatives formed the Co-operative Party in the early 20th century to represent members of co-ops in Parliament. The Co-operative Party now has a permanent electoral pact with the Labour Party, and some Labour MPs are Co-operative Party members. UK co-operatives retain a significant market share in food retail, insurance, banking, funeral services, and the travel industry in many parts of the country.

In Germany, the rebuilding of the country after World War II created a legislative opportunity in which politician Hans Boeckler significantly lobbied for the Co-Determination ("Mitbestimmung") policies which were established, requiring large companies to include a Workers' Council in the Board of Directors.[32] These policies have had some influence on European Union policies.[33][34]

Co-operative banks have become very successful throughout Europe, and were able to respond more effectively than most corporate banks during the 2008 mortgage-securities crisis.[35][36][37]

Renewable Energy co-operatives in Europe became important in the early development of windpower in Denmark beginning in the 1970s.[38] Germany followed in the early 1990s, first on a larger scale with wind co-ops, then with a citizen's movement which challenged the reliance on nuclear power, organized, challenged the energy monopolists there, and successfully created a successful co-op social enterprise by 1999.[39][40] A citizen's group began operating wind turbines and involving broad community ownership in the U.K. by 1995.[41] Deregulation of the electricity markets allowed energy co-operative social entrepreneurs to begin to create alternatives to the monopolies in various countries. In France, where an enormous percentage of the power is generated by nuclear sources, this occurred after 2000.[42] In Spain, wind power was developed by corporate-led efforts, and it took longer for a renewable energy-focused social enterprise to get established.[43] Similar renewable energy co-ops around Europe have organized in a network.[44]

Asian societies have adapted the co-operative model, including some of the most successful in the world.[45][46] Nevertheless, the crises generated by traditional inequalities and the shareholder model continues to require civil society and entrepreneurial responses, such as the Citizens Coalition for Economic Justice in South Korea, the Seikatsu Club Consumer Co-operative in Japan, and the Self-Employed Women's Association in India.[47][48][49] Other noteworthy efforts include Sophon Suphapong's efforts as governor in Thailand with agricultural co-ops and Antonio Yapsutco Fortich's contributions in the Philippines helping formulate a co-operative strategy with sugar workers.[50][51]

The International Labor Organization, originally established in 1919, has a Co-operative Division.[52]

Co-operatives were brought to Latin America and developed there by 1902.[53] Substantially independent efforts to develop employee-owned enterprises or co-operatives have occurred as responses to crises, such as the systemic IMF-based default in Argentina in 2001 [54] In Brazil, the World Social Forum process lead to the articulation of Solidarity Economics, a modern, activist formulation of co-operativism, with the MST landless worker's movement demonstrating enormous courage and social entrepreneurship.[55][56] In Venezuela, the late Hugo Chávez's administration began to incentivize co-operatives, resulting in their rapid and extensive development there.[57][58]

The co-operative model has a long history in the U.S., including a factory in the 1790s, the Knights of Labor, and the Grange.[59] In Colorado, USA the Meadowlark cooperative administers the only private free land program in the United States, providing many services to its members who buy and sell together. In New York City, several food co-operatives were founded around 2010, adding to others, some existing since the 1970s.[60] The U.S. has some diverse worker co-operatives, such as an organic bread factory co-op and an engineering firm.[61] Some have already incorporated environmental and/or Fair Trade criteria into their products, such as the aforementioned bread-maker, Organic Valley foods, and Equal Exchange.[62]

Credit unions were established in the U.S. by 1908.[63] Their member-owned, co-operative structure created stable governance structure, so that they were only slightly affected by the 2008 mortgage securities crisis.[64]

Electrical co-operatives became an important economic strategy for U.S. rural areas beginning in the 1930s, and continue to operate successfully through events such as Hurricane Sandy in 2012.[65][66] However, the majority in the U.S. demonstrate that co-operative values do not necessarily lead to a progressive social and environmental consciousness, as many remain focuses on fossil fuel and nuclear fuels.[67] Nevertheless, new generation renewable power co-operatives have begun to be organized.[68][69]

Agricultural co-operatives in the U.S. have had some mainstream success, including Welch's, Ocean Spray, and Land O'Lakes.[70][71][72]

In the United States, a co-operative association was founded by 1920. Currently there are over 29,000 co-operatives employing 2 million people with over $652 billion in annual revenue.[73] To address the need for an organization oriented to newer and smaller co-ops, the U.S. Federation of Worker Co-operatives was founded after 2000.

An alternative method of employee-ownership, the Employee Stock Ownership Plan (ESOP), was developed in the U.S. by Louis Kelso and advocated by Senator Russell Long to be incentivized in the ERISA law of 1974.[74] For example, a large Southeastern US supermarket chain[75] a California manufacturer, and a furniture-maker with earnings of more than $2 billion,[76] are employee-owned. Employee-owned trusts have also been developed more or less independently, for example at an established iron pipe company[77]

The Fair Trade certification movement established first in Holland in 1988 with an international headquarters in Bonn nine years later requires member farmers to have established a co-operative.[78][79][80]